[Federal Register: December 24, 2003 (Volume 68, Number 247)]
[Notices]
[Page 74613-74621]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24de03-93]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Centers for Medicare & Medicaid Services
[CMS-1226-GNC]
RIN 0938-ZA44
Medicare Program; Criteria and Standards for Evaluating
Intermediary, Carrier, and Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Regional Carrier Performance During
Fiscal Year 2004
AGENCY: Centers for Medicare & Medicaid Services (CMS), Health and
Human Services (HHS).
ACTION: General notice with comment period.
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SUMMARY: This notice describes the criteria and standards to be used
for evaluating the performance of fiscal intermediaries, carriers, and
Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) regional carriers in the administration of the Medicare
program beginning on the first day of the first month following
publication of this notice in the Federal Register. The results of
these evaluations are considered whenever we enter into, renew, or
terminate an intermediary agreement, carrier contract, or DMEPOS
regional carrier contract or take other contract actions, for example,
assigning or reassigning providers or services to an intermediary or
designating regional or national intermediaries. We are requesting
public comment on these criteria and standards.
DATES: Effective Date: The criteria and standards are effective January
2, 2004.
Comment Period: Comments will be considered if we receive them at
the appropriate address as provided below no later than 5 p.m. (EDT) on
January 23, 2004.
ADDRESSES: In commenting, please refer to file code CMS-1226-GNC.
Because of staff and resource limitations, we cannot accept comments by
facsimile (fax) transmission. Mail written comments (one original and
two copies) to the following address:
Centers for Medicare & Medicaid Services, Department of Health and
Human Services, Attention: CMS-1226-GNC, PO Box 8016, Baltimore, MD
21244-8016.
If you prefer, you may deliver (by hand or courier) your written
comments (one original and two copies) to one of the following
addresses:
Room 443-G, Hubert H. Humphrey Building, 200 Independence Avenue,
SW., Washington, DC, 20201 or Room C5-14-03, 7500 Security Boulevard,
Baltimore, Maryland 21244-1850.
(Because access to the interior of the HHH Building is not readily
available to persons without Federal government identification,
commenters are encouraged to leave their comments in the CMS drop slots
located in the main lobby of the building. A stamp-in clock is
available for persons wishing to retain a proof of the comments being
filed.)
Comments mailed to the addresses indicated as appropriate for hand
or courier delivery may be delayed and could be considered late.
For information on viewing public comments, see the SUPPLEMENTARY
INFORMATION section.
FOR FURTHER INFORMATION CONTACT: Sue Lathroum, (410) 786-7409.
SUPPLEMENTARY INFORMATION: In several instances, we identify a Medicare
manual as a source of more detailed requirements. Medicare fee-for-
service contractors have copies of the various Medicare manuals
referenced in this notice. Members of the public also have access to
our manual instructions.
Medicare manuals are available for review at local Federal
Depository Libraries (FDLs). Under the FDL Program, government
publications are sent to approximately 1,400 designated public
libraries throughout the United States. To locate the nearest FDL,
individuals should contact any public library.
In addition, individuals may contact regional depository libraries
that receive and retain at least one copy of nearly every Federal
government publication, either in printed or microfilm form, for use by
the general public. These libraries provide reference services and
interlibrary loans; however, they are not sales outlets. Individuals
may obtain information about the location of the nearest regional
depository library from any library. Information may also be obtained
from the following Web site: http://www.cms.hhs.gov/manuals.
Finally, all of our regional offices (ROs) maintain all Medicare
manuals for
[[Page 74614]]
public inspection. To find the location of our nearest available RO,
you may call the individual listed at the beginning of this notice.
That individual can also provide information about purchasing or
subscribing to the various Medicare manuals.
Response to Public Comments: Because of the large number of items
of correspondence we normally receive on Federal Register documents
published for comment, we are unable to acknowledge or respond to them
individually. We will consider all comments we receive by the date and
time specified in the Comment Period section of this preamble, and, if
we proceed with a subsequent document, we will respond to the comments
in the preamble of that document.
Inspection of Public Comments: Comments received timely are
available for public inspection or they are processed beginning
approximately 3 weeks after the close of the comment period, at the
headquarters of the Centers for Medicare & Medicaid Services, 7500
Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of
each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view
public comments, phone (410) 786-7197.
I. Background
A. Part A--Hospital Insurance
Under section 1816 of the Social Security Act (the Act), public or
private organizations and agencies participate in the administration of
Part A (Hospital Insurance) of the Medicare program under agreements
with us. These agencies or organizations, known as fiscal
intermediaries, determine whether medical services are covered under
Medicare, determine correct payment amounts and then make payments to
the health care providers (for example, hospitals, skilled nursing
facilities (SNFs), and community mental health centers) on behalf of
the beneficiaries. Section 1816(f) of the Act requires us to develop
criteria, standards, and procedures to evaluate an intermediary's
performance of its functions under its agreement.
Section 1816(e)(4) of the Act requires us to designate regional
agencies or organizations, which are already Medicare intermediaries
under section 1816 of the Act, to perform claim processing functions
for freestanding Home Health Agency (HHA) claims. We refer to these
organizations as Regional Home Health Intermediaries (RHHIs). See Sec.
421.117 and the final rule published in the Federal Register on May 19,
1988 (53 FR 17936) for more details about the RHHIs.
The evaluation of intermediary performance is part of our contract
management process. These evaluations need not be limited to the
current fiscal year (FY), other fixed term basis, or agreement term.
B. Part B Medical Insurance
Under section 1842 of the Act, we are authorized to enter into
contracts with carriers to fulfill various functions in the
administration of Part B, Supplementary Medical Insurance of the
Medicare program. Beneficiaries, physicians, and suppliers of services
submit claims to these carriers. The carriers determine whether the
services are covered under Medicare and the amount payable for the
services or supplies, and then make payment to the appropriate party.
Under section 1842(b)(2) of the Act, we are required to develop
criteria, standards, and procedures to evaluate a carrier's performance
of its functions under its contract. Evaluations of Medicare fee-for-
service contractor performance need not be limited to the current FY,
other fixed term basis, or contract term. The evaluation of carrier
performance is part of our contract management process.
C. Durable Medical Equipment, Prosthetics, Orthotics, and Supplies
(DMEPOS) Regional Carriers
In accordance with section 1834(a)(12) of the Act, we have entered
into contracts with four DMEPOS regional carriers to perform all of the
duties associated with the processing of claims for DMEPOS, under Part
B of the Medicare program. These DMEPOS regional carriers process
claims based on a Medicare beneficiary's principal residence by State.
Section 1842(a) of the Act authorizes contracts with carriers for the
payment of Part B claims for Medicare covered services and items.
Section 1842(b)(2) of the Act requires us to publish in the Federal
Register criteria and standards for the efficient and effective
performance of carrier contract obligations. Evaluation of Medicare
fee-for-service contractor performance need not be limited to the
current FY, other fixed term basis, or contract term. The evaluation of
DMEPOS regional carrier performance is part of our contract management
process.
D. Development and Publication of Criteria and Standards
In addition to the statutory requirements, Sec. Sec. 421.120 and
421.122 provide for publication of a Federal Register notice to
announce criteria and standards for intermediaries before
implementation. Section 421.201 provides for publication of a Federal
Register notice to announce criteria and standards for carriers before
implementation. The current criteria and standards for intermediaries,
carriers, and DMEPOS regional carriers were published in the February
28, 2003 final rule (68 FR 9681).
To the extent possible, we make every effort to publish the
criteria and standards before the beginning of the Federal FY, which is
October 1. If we do not publish a Federal Register notice before the
new FY begins, readers may presume that until and unless notified
otherwise, the criteria and standards that were in effect for the
previous FY remain in effect.
In those instances in which we are unable to meet our goal of
publishing the subject Federal Register notice before the beginning of
the FY, we may publish the criteria and standards notice at any
subsequent time during the year. If we publish a notice in this manner,
the evaluation period for the criteria and standards that are the
subject of the notice will be effective on the first day of the first
month following publication. Any revised criteria and standards will
measure performance prospectively; that is, we will not apply new
measurements to assess performance on a retroactive basis.
It is not our intention to revise the criteria and standards that
will be used during the evaluation period once this information has
been published in a Federal Register notice. However, on occasion,
either because of administrative action or congressional mandate, there
may be a need for changes that have a direct impact on the criteria and
standards previously published, or that require the addition of new
criteria or standards, or that cause the deletion of previously
published criteria and standards. If we must make these changes, we
will publish an amended Federal Register notice before implementation
of the changes. In all instances, necessary manual issuances will be
published to ensure that the criteria and standards are applied
uniformly and accurately. Also, as in previous years, this Federal
Register notice will be republished and the effective date revised if
changes are warranted as a result of the public comments received on
the criteria and standards.
[[Page 74615]]
II. Analysis of and Response to Public Comments Received on FY 2003
Criteria and Standards
We received no comments in response to the February 28, 2003
Federal Register general notice with comment.
III. Criteria and Standards--General
Basic principles of the Medicare program are to pay claims promptly
and accurately and to foster good beneficiary and provider relations.
Contractors must administer the Medicare program efficiently and
economically. The goal of performance evaluation is to ensure that
contractors meet their contractual obligations. We measure contractor
performance to ensure that contractors do what is required of them by
statute, law, regulation, contract, and our directives.
We have developed a contractor oversight program for FY 2004 that
outlines expectations of the contractor; measures the performance of
the contractor; evaluates the performance against the expectations; and
provides for appropriate contract action based upon the evaluation of
the contractor's performance.
As a means to monitor the accuracy of Medicare FFS payments, we
have established the Comprehensive Error Rate Testing (CERT) program--
which produces error rates for claims payment decisions made carriers,
DMERCs, and FIs. Beginning in November 2003, the CERT program produced
claims payment error rates for each individual carrier and DMERC. (FI--
specific rates will be available the following year.) These rates
measure not only how well contractors are doing at implementing
automated review edits and identifying which claims to subject to
manual medical review but also measure the impact of the contractor's
provider outreach/education and effectiveness of the contractor's
provider call centers. As such, we will utilize these contractor-
specific error rates as a means to evaluate a contractor's performance.
Several times throughout this notice, we refer to the
``readability'' of letters, decisions, or correspondence that are going
to Medicare beneficiaries from intermediaries or carriers. In those
instances, ``readability'' is defined as being below the 8th grade
reading level unless it is obvious that an incoming request from the
beneficiary contains language written at a higher level. In these
cases, the readability level is tailored to the capacities and
circumstances of the intended recipient.
In addition to evaluating performance based upon expectations for
FY 2004, we may also conduct follow-up evaluations throughout FY 2004
of areas in which contractor performance was out of compliance with
statute, regulations, and our performance expectations during prior
review years and thus required the contractor to submit a Performance
Improvement Plan (PIP).
We may also utilize Statement of Auditing Standards-70 (SAS-70)
reviews as a means to evaluate contractors in some or all business
functions.
In FY 2001, we established the Contractor Rebuttal Process as a
commitment to continual improvement of contractor performance
evaluation (CPE). We will continue the use of this process in FY 2004.
The Contractor Rebuttal Process provides the contractors an opportunity
to submit a written rebuttal of CPE findings of fact. Whenever we
conduct an evaluation of contractor operations, contractors have 7
calendar days from the date of the CPE review exit conference to submit
a written rebuttal. The CPE review team or, if appropriate, the
individual reviewer will consider the contents of the rebuttal before
the issuance of the final CPE report to the contractor.
The FY 2004 CPE for intermediaries and carriers is structured into
five criteria designed to meet the stated objectives. The first
criterion is ``Claims Processing'' which measures contractual
performance against claims processing accuracy and timeliness
requirements as well as activities in handling appeals. Within the
Claims Processing Criterion, we have identified those performance
standards that are mandated by legislation, regulation, or judicial
decision. These standards include claims processing timeliness, the
accuracy of Medicare Summary Notices (MSNs), the appropriateness of
determinations reversed by an administrative law judge (ALJ), the
timeliness of intermediary reconsiderations, reviews and hearings and
the timeliness of carrier reviews and hearings, and the readability of
carrier reviews. Further evaluation in the Claims Processing Criterion
may include, but is not limited to, the accuracy of claims processing,
the percent of claims paid with interest, and the accuracy of
reconsiderations, reviews, and hearings.
The second criterion is ``Customer Service'' which assesses the
adequacy of the service provided to customers by the contractor in its
administration of the Medicare program. The mandated standard in the
Customer Service Criterion is the need to provide beneficiaries with
written replies that are responsive, that is, provide in detail the
reasons for a determination when a beneficiary requests this
information, have a customer-friendly tone and clarity, and are at the
appropriate reading level. Further evaluation of services under this
criterion may include, but is not limited to, the timeliness and
accuracy of all correspondence both to beneficiaries and providers;
monitoring of the quality of replies provided by the contractor's
customer service representatives (quality call monitoring); beneficiary
and provider education, training, and outreach activities; and service
by the contractor's customer service representatives to beneficiaries
who come to the contractor's facility (walk-in inquiry service).
The third criterion is ``Payment Safeguards'' that evaluates
whether the Medicare Trust Fund is safeguarded against inappropriate
program expenditures. Intermediary and carrier performance may be
evaluated in the areas of Medical Review (MR), Medicare Secondary Payer
(MSP), Overpayments (OP), and Provider Enrollment (PE). In addition,
intermediary performance may be evaluated in the area of Audit and
Reimbursement (A&R).
In FY 1996 the Congress enacted the Health Insurance Portability
Act, Medicare Integrity Program giving us the authority to contract
with other than, but not excluding, Medicare carriers and
intermediaries to perform certain program safeguard functions. In
situations where one or more program safeguard functions have been
contracted to another entity, we may evaluate the flow of communication
and information between a Medicare fee-for-service contractor and the
Payment Safeguard Contractor. All Benefit Integrity functions have been
transitioned from intermediaries and carriers to the Program Safeguard
Contractors, but three DMERCs will continue to handle this work in FY
2004. Because some of the DMERC contractors still conduct Benefit
Integrity activities, we may evaluate their performance of that
function.
Mandated performance standards for intermediaries in the Payment
Safeguards criterion are the accuracy of decisions on SNF demand bills,
and the timeliness of processing Tax Equity and Fiscal Responsibility
Act (TEFRA) target rate adjustments, exceptions, and exemptions. There
are no mandated performance standards for carriers in the Payment
Safeguards criterion. Intermediaries and carriers may also be evaluated
on any Medicare Integrity Program (MIP) activities if performed under
their agreement or contract.
[[Page 74616]]
The fourth criterion is ``Fiscal Responsibility'' which evaluates
the contractor's efforts to protect the Medicare program and the public
interest. Contractors must effectively manage Federal funds for both
the payment of benefits and costs of administration under the Medicare
program. Proper financial and budgetary controls, including internal
controls, must be in place to ensure contractor compliance with its
agreement with HHS and CMS.
Additional functions reviewed under this criterion may include, but
are not limited to, adherence to approved budget, compliance with the
Budget and Performance Requirements (BPRs), and compliance with
financial reporting requirements.
The fifth and final criterion is ``Administrative Activities''
which measures a contractor's administrative management of the Medicare
program. A contractor must efficiently and effectively manage its
operations. Proper systems security (general and application controls),
Automated Data Processing (ADP) maintenance, and disaster recovery
plans must be in place. A contractor's evaluation under the
Administrative Activities criterion may include, but is not limited to,
establishment, application, documentation, and effectiveness of
internal controls that are essential in all aspects of a contractor's
operation, and the degree to which the contractor cooperates with us in
complying with the Federal Managers' Financial Integrity Act of 1982
(FMFIA). Administrative Activities evaluations may also include reviews
related to contractor implementation of our general instructions and
data and reporting requirements.
We have developed separate measures for RHHIs in order to evaluate
the distinct RHHI functions. These functions include the processing of
claims from freestanding HHAs, hospital-affiliated HHAs, and hospices.
Through an evaluation using these criteria and standards, we may
determine whether the RHHI is effectively and efficiently administering
the program benefit or whether the functions should be moved from one
intermediary to another in order to gain that assurance.
Below, we list the criteria and standards to be used for evaluating
the performance of intermediaries, RHHIs, carriers, and DMEPOS regional
carriers.
IV. Criteria and Standards for Intermediaries
A. Claims Processing Criterion
The Claims Processing criterion contains the following six mandated
standards:
Standard 1. Not less than 95.0 percent of clean electronically
submitted non-Periodic Interim Payment claims are paid within
statutorily specified time frames. Clean claims are defined as claims
that do not require Medicare intermediaries to investigate or develop
them outside of their Medicare operations on a prepayment basis.
Specifically, clean, non-Periodic Interim Payment electronic claims can
be paid as early as the 14th day (13 days after the date of receipt)
and must be paid by the 31st day (30 days after the date of receipt).
Our expectation is that contractors will meet this percentage on a
monthly basis.
Standard 2. Not less than 95.0 percent of clean paper non-Periodic
Interim Payment claims are paid within specified time frames.
Specifically, clean, non-Periodic Interim Payment paper claims can be
paid as early as the 27th day (26 days after the date of receipt) and
must be paid by the 31st day (30 days after the date of receipt). Our
expectation is that contractors will meet this percentage on a monthly
basis.
Standard 3. The percentage of reconsideration determinations
reversed by ALJs is acceptable. We have defined an acceptable reversal
rate by ALJs as one that is at or below 5.0 percent.
Standard 4. 75.0 percent of reconsiderations are processed within
60 days, and 90.0 percent are processed within 90 days. Our expectation
is that contractors will meet this percentage on a monthly basis.
Standard 5. 95.0 percent of Part B review determinations are
completed within 45 days. Our expectation is that contractors will meet
this percentage on a monthly basis.
Standard 6. 90.0 percent of Part B hearing decisions are completed
within 120 days. Our expectation is that contractors will meet this
percentage on a monthly basis.
Because intermediaries process many claims for benefits under the
Part B Medical Insurance portion of the Medicare Program, we also may
evaluate how well an intermediary follows the procedures for processing
appeals of any Part B claims.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Accuracy of claims processing.
[sbull] Establishment and maintenance of a relationship with Common
Working File (CWF) Host.
[sbull] Accuracy of processing reconsideration cases.
[sbull] Accuracy of reviews and hearings, as well as the
appropriateness of the reading level of any review determination
letters.
[sbull] Accuracy and timeliness of processing appeals under section
521 of the Medicare, Medicaid and SCHIP Benefits Improvement and
Protection Act of 2000 (BIPA) and section 940 of the Medicare
Prescription Drug, Improvement, and Modernization Act (DIMA). See Note
below.
Note: Section 521 of BIPA and section 940 of DIMA amend section
1869 of the Act by requiring major revisions to the Medicare appeals
process. Upon implementation of section 521, the first level in a
beneficiary's appeal will be a ``redetermination'' that will replace
the current reconsideration for Part A appeals and the current
review for Part B appeals. Intermediaries will be required to
process all requests for redeterminations within 60 days of receipt
of the request. Upon implementation of section 521 of BIPA, and
section 940 of DIMA, we intend to begin evaluating whether
intermediaries are meeting the timeliness and accuracy requirements
for processing redeterminations. Because the ability for
beneficiaries to request this new first level of appeal will not be
initiated until section 521 of BIPA is implemented, there will be a
period of time in which intermediaries will not only be processing
redeterminations, but will continue to process the reconsideration,
review, and hearing workloads that existed prior to the
implementation of BIPA. Upon the implementation of section 521 of
BIPA and section 940 of DIMA, this 60-day requirement and the
processing accuracy will be additional functions that may be
evaluated.
B. Customer Service Criterion
Functions that may be evaluated under this criterion include, but
are not limited to, the following:
[sbull] Providing timely and accurate replies to beneficiary and
provider telephone inquiries.
[sbull] Quality Call Monitoring.
[sbull] Training of Customer Service Representatives.
[sbull] Ensuring the validity of the call center performance data
that are being reported in the Customer Service Assessment and
Management System.
[sbull] Providing timely and accurate written replies to
beneficiaries and providers that address the concerns raised and are
written with an appropriate customer-friendly tone and clarity and that
those written to beneficiaries are at the appropriate reading level.
[sbull] Walk-in inquiry service.
[[Page 74617]]
[sbull] Conducting beneficiary and provider education, training,
and outreach activities.
[sbull] Effectively maintaining an Internet Website dedicated to
furnishing providers and physicians timely, accurate, and useful
Medicare program information.
C. Payment Safeguards Criterion
The Payment Safeguard criterion contains the following two mandated
standards:
Standard 1. Decisions on SNF demand bills are accurate.
Standard 2. TEFRA target rate adjustments, exceptions, and
exemptions are processed within mandated time frames. Specifically,
applications must be processed to completion within 75 days after
receipt by the contractor or returned to the hospitals as incomplete
within 60 days of receipt.
Intermediaries may also be evaluated on any MIP activities if
performed under their Part A contractual agreement. These functions and
activities include, but are not limited to the following:
[sbull] Audit and Reimbursement
--Performing the activities specified in our general instructions
for conducting audit and settlement of Medicare cost reports.
--Establishing accurate interim payments.
[sbull] Benefit Integrity
--Referring allegations of potential fraud that are made by
beneficiaries, providers, CMS, Office of Inspector General (OIG), and
other sources to the Payment Safeguard Contractor.
--Putting in place effective detection and deterrence programs for
potential fraud.
[sbull] Medical Review
--Increasing the effectiveness of medical review activities.
--Exercising accurate and defensible decision making on medical
reviews.
--Effectively educating and communicating with the provider
community.
--Collaborating with other internal components and external
entities to ensure the effectiveness of medical review activities.
[sbull] Medicare Secondary Payer
--Accurately reporting MSP savings.
--Accurately following MSP claim development and edit procedures.
--Auditing hospital files and claims to determine that claims are
being filed to Medicare appropriately.
--Supporting the Coordination of Benefits Contractor's efforts to
identify responsible payers primary to Medicare.
--Identifying, recovering, and referring mistaken/conditional
Medicare payments in accordance with appropriate Medicare Intermediary
Manual instructions and our other pertinent general instructions, in
the specified order of priority.
[sbull] Overpayments
--Collecting and referring Medicare debts timely.
--Accurately reporting and collecting overpayments.
--Adhering to our instructions for management of Medicare Trust
Fund debts.
[sbull] Provider Enrollment
--Complying with assignment of staff to the provider enrollment
function and training the staff in procedures and verification
techniques.
--Complying with the operational standards relevant to the process
for enrolling providers.
D. Fiscal Responsibility Criterion
We may review the intermediary's efforts to establish and maintain
appropriate financial and budgetary internal controls over benefit
payments and administrative costs. Proper internal controls must be in
place to ensure that contractors comply with their agreements with us.
Additional functions that may be reviewed under the Fiscal
Responsibility criterion include, but are not limited to, the
following:
[sbull] Adherence to approved program management and MIP budgets.
[sbull] Compliance with the BPRs.
[sbull] Compliance with financial reporting requirements.
[sbull] Control of administrative cost and benefit payments.
E. Administrative Activities Criterion
We may measure an intermediary's administrative ability to manage
the Medicare program. We may evaluate the efficiency and effectiveness
of its operations, its system of internal controls, and its compliance
with our directives and initiatives.
We may measure an intermediary's efficiency and effectiveness in
managing its operations. Proper systems security (general and
application controls), automated data processing (ADP) maintenance, and
disaster recovery plans must be in place. An intermediary must also
test system changes to ensure the accurate implementation of our
instructions.
Our evaluation of an intermediary under the Administrative
Activities criterion may include, but is not limited to, reviews of the
following:
[sbull] Systems security.
[sbull] ADP maintenance (configuration management, testing, change
management, and security).
[sbull] Disaster recovery plan/systems contingency plan.
[sbull] Implementation of our general instructions.
[sbull] Data and reporting requirements implementation.
[sbull] Internal controls establishment and use, including the
degree to which the contractor cooperates with the Secretary in
complying with the FMFIA.
V. Criteria and Standards for Regional Home Health Intermediaries
(RHHIs)
The following three standards are mandated for the RHHI criterion:
Standard 1. Not less than 95.0 percent of clean electronically
submitted non-Periodic Interim Payment hospice claims are paid within
statutorily specified time frames. Clean claims are defined as claims
that do not require Medicare intermediaries to investigate or develop
them outside of their Medicare operations on a prepayment basis.
Specifically, clean, non-Periodic Interim Payment electronic claims can
be paid as early as the 14th day (13 days after the date of receipt)
and must be paid by the 31st day (30 days after the date of receipt).
Our expectation is that contractors will meet this percentage on a
monthly basis.
Standard 2. Not less than 95.0 percent of clean paper non-Periodic
Interim Payment hospice claims are paid within specified time frames.
Specifically, clean, non-Periodic Interim Payment paper claims can be
paid as early as the 27th day (26 days after the date of receipt) and
must be paid by the 31st day (30 days after the date of receipt). Our
expectation is that contractors will meet this percentage on a monthly
basis.
Standard 3. 75.0 percent of HHA and hospice reconsiderations are
processed within 60 days and 90.0 percent are processed within 90 days.
Our expectation is that contractors will meet this percentage on a
monthly basis.
We may use this criterion to review an RHHI's performance for
handling the HHA and hospice workload. This includes processing HHA and
hospice claims timely and accurately; properly paying and settling HHA
cost reports; and timely and accurately processing reconsiderations and
BIPA section 521 redeterminations from beneficiaries, HHAs, and
hospices.
Note: Section 521 of BIPA and section 940 of DIMA amend section
1869 of the Act by requiring major revisions to the Medicare appeals
process. Upon implementation of section 521 of BIPA, the first level
in a beneficiary's appeal will be a ``redetermination'' that will
replace the current reconsideration for Part A appeals and the
current review for Part B appeals. RHHIs will be required to process
all requests
[[Page 74618]]
for redeterminations within 60 days of receipt of the request. Upon
implementation of section 521 of BIPA and section 940 of DIMA, we
intend to begin evaluating whether RHHIs are meeting the timeliness
and accuracy requirements for processing redeterminations. Because
the ability for beneficiaries to request this new first level of
appeal will not be initiated until section 521 of BIPA are
implemented, RHHIs will not only be processing redeterminations, but
will continue to process the reconsideration, review, and hearing
workloads that existed prior to the implementation of BIPA. Upon the
implementation of section 521 of BIPA and section 940 of DIMA this
60-day requirement and the processing accuracy will be additional
functions that may be evaluated.
VI. Criteria and Standards for Carriers
A. Claims Processing Criterion
The Claims Processing criterion contains the following six mandated
standards:
Standard 1. Not less than 95.0 percent of clean electronically
submitted claims are processed within statutorily specified time
frames. Clean claims are defined as claims that do not require Medicare
carriers to investigate or develop them outside of their Medicare
operations on a prepayment basis. Specifically, clean electronic claims
can be paid as early as the 14th day (13 days after the date of
receipt) and must be paid by the 31st day (30 days after the date of
receipt). Our expectation is that contractors will meet this percentage
on a monthly basis.
Standard 2. Not less than 95.0 percent of clean paper claims are
processed within specified time frames. Specifically, clean paper
claims can be paid as early as the 27th day (26 days after the date of
receipt) and must be paid by the 31st day (30 days after the date of
receipt). Our expectation is that contractors will meet this percentage
on a monthly basis.
Standard 3. 98.0 percent of MSNs are properly generated. Our
expectation is that MSN messages are accurately reflecting the services
provided.
Standard 4. 95.0 percent of review determinations are completed
within 45 days. Our expectation is that contractors will meet this
percentage on a monthly basis.
Standard 5. 90.0 percent of carrier hearing decisions are completed
within 120 days. Our expectation is that contractors will meet this
percentage on a monthly basis.
Standard 6. Review determination letters prepared in response to
beneficiary initiated appeal requests are written at an appropriate
reading level.
Additional functions that may be evaluated under this criterion
includes, but are not limited to, the following:
[sbull] Claims Processing accuracy.
[sbull] Establishment and maintenance of relationship with the CWF
Host.
[sbull] Accuracy of processing review determination cases.
[sbull] Accuracy of processing hearing cases with decision letters
that are clear and have an appropriate customer-friendly tone.
[sbull] Accuracy and timeliness of processing appeals under BIPA.
Note: Section 521 of BIPA and section 940 of DIMA amend section
1869 of the Act by requiring major revisions to the Medicare appeals
process. Upon implementation of section 521 of BIPA, the first level
in a beneficiary's appeal will be a ``redetermination'' that will
replace the current review for Part B appeals. Carriers will be
required to process all requests for redeterminations within 60 days
of receipt of the request. Upon implementation of section 521 of
BIPA and section 940 of DIMA, we intend to begin evaluating whether
carriers are meeting the timeliness and accuracy requirements for
processing redeterminations. Because the ability for beneficiaries
to request this new first level of appeal will not be initiated
until section 521 of BIPA is implemented, there will be a period of
time in which carriers will not only be processing redeterminations,
but will continue to process the review and hearing workloads that
existed prior to the implementation of BIPA. Upon the implementation
of section 521 of BIPA and section 940 of DIMA, this 60-day
requirement and the processing accuracy will be additional functions
that may be evaluated.
B. Customer Service Criterion
Customer Service criterion contains the following mandated
standard:
Standard. Replies to beneficiary correspondence address the
beneficiary's concerns, are written with an appropriate customer-
friendly tone and clarity, and are at the appropriate reading level.
Contractors must meet our performance expectations that
beneficiaries and providers are served by prompt and accurate
administration of the program in accordance with all applicable
laws, regulations, and our general instructions.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Providing timely and accurate replies to beneficiary and
provider telephone inquiries.
[sbull] Quality call monitoring.
[sbull] Training of customer service representatives.
[sbull] Providing timely and accurate written replies to
beneficiary and provider inquiries.
[sbull] Ensuring the validity of the call center performance
data that are being reported in the Customer Service Assessment and
Management System.
[sbull] Walk-in inquiry service.
[sbull] Conducting beneficiary and provider education, training,
and outreach activities.
[sbull] Effectively maintaining an Internet Website dedicated to
furnishing providers timely, accurate, and useful Medicare program
information.
C. Payment Safeguards Criterion
Carriers may be evaluated on any MIP activities if performed
under their contracts. In addition, other carrier functions and
activities that may be reviewed under this criterion include, but
are not limited to the following:
[sbull] Benefit Integrity
--Referring allegations of potential fraud that are made by
beneficiaries, providers, CMS, OIG, and other sources to the Payment
Safeguard Contractor.
--Putting in place effective detection and deterrence programs
for potential fraud.
[sbull] Medical Review
--Increasing the effectiveness of medical review activities.
--Exercising accurate and defensible decision making on medical
reviews.
--Effectively educating and communicating with the provider
community.
--Collaborating with other internal components and external
entities to ensure the effectiveness of medical review activities.
[sbull] Medicare Secondary Payer
--Accurately reporting MSP savings.
--Accurately following MSP claim development/edit procedures.
--Supporting the Coordination of Benefits Contractor's efforts
to identify responsible payers primary to Medicare.
--Identifying, recovering, and referring mistaken/conditional
Medicare payments in accordance with the appropriate Medicare
Carriers Manual instructions, and our other pertinent general
instructions.
[sbull] Overpayments
--Collecting and referring Medicare debts timely.
--Accurately reporting and collecting overpayments.
--Compliance with our instructions for management of Medicare
Trust Fund debts.
[sbull] Provider Enrollment
--Complying with assignment of staff to the provider enrollment
function and training staff in procedures and verification
techniques.
--Complying with the operational standards relevant to the
process for enrolling suppliers.
D. Fiscal Responsibility Criterion
We may review the carrier's efforts to establish and maintain
appropriate financial and budgetary internal controls over benefit
payments and administrative costs. Proper internal controls must be
in place to ensure that contractors comply with their contracts.
Additional functions that may be reviewed under the Fiscal
Responsibility criterion include, but are not limited to, the
following:
[sbull] Adherence to approved program management and MIP
budgets.
[sbull] Compliance with the BPRs.
[sbull] Compliance with financial reporting requirements.
[sbull] Control of administrative cost and benefit payments.
[[Page 74619]]
E. Administrative Activities Criterion
We may measure a carrier's administrative ability to manage the
Medicare program. We may evaluate the efficiency and effectiveness
of its operations, its system of internal controls, and its
compliance with our directives and initiatives.
We may measure a carrier's efficiency and effectiveness in
managing its operations. Proper systems security (general and
application controls), ADP maintenance, and disaster recovery plans
must be in place. Also, a carrier must test system changes to ensure
accurate implementation of our instructions.
Our evaluation of a carrier under this criterion may include,
but is not limited to, reviews of the following:
[sbull] Systems security.
[sbull] ADP maintenance (configuration management, testing,
change management, and security).
[sbull] Disaster recovery plan/systems contingency plan.
[sbull] Implementation of our general instructions.
[sbull] Data and reporting requirements implementation.
[sbull] Internal controls establishment and use, including the
degree to which the contractor cooperates with the Secretary in
complying with the FMFIA.
VII. Criteria and Standards for Durable Medical Equipment, Prosthetics,
Orthotics, and Supplies (DMEPOS) Regional Carriers
The five criteria for DMEPOS regional carriers contain a total
of seven mandated standards against which all DMEPOS regional
carriers must be evaluated.
There also are examples of other activities for which the DMEPOS
regional carriers may be evaluated. The mandated standards are in
the Claims Processing and Customer Service Criteria. In addition to
being described in these criteria, the mandated standards are also
described in Attachment J-37 to the DMEPOS regional carrier
statement of work (SOW).
A. Claims Processing Criterion
The Claims Processing criterion contains the following six
mandated standards:
Standard 1. Not less than 95.0 percent of clean electronically
submitted claims are processed within statutorily specified time
frames. Clean claims are defined as claims that do not require
Medicare DMEPOS regional carriers to investigate or develop them
outside of their Medicare operations on a prepayment basis.
Specifically, clean electronic claims can be paid as early as the
14th day (13 days after the date of receipt) and must be paid by the
31st day (30 days after the date of receipt). Our expectation is
that contractors will meet this percentage on a monthly basis.
Standard 2. Not less than 95.0 percent of clean paper claims are
processed within specified time frames. Specifically, clean paper
claims can be paid as early as the 27th day (26 days after the date
of receipt) and must be paid by the 31st day (30 days after the date
of receipt). Our expectation is that contractors will meet this
percentage on a monthly basis.
Standard 3. Properly generated 98.0 percent of MSNs. Our
expectation is that MSN messages are accurately reflecting the
services provided.
Standard 4. 95.0 percent of DMEPOS regional carrier review
determinations are completed within 45 days. Our expectation is that
contractors will meet this percentage on a monthly basis.
Standard 5. 90.0 percent of DMEPOS regional carrier hearing
decisions are completed within 120 days. CMS's expectation is that
contractors will meet this percentage on a monthly basis.
Standard 6. Review determination letters prepared in response to
beneficiary initiated appeal requests are written at an appropriate
reading level.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Claims processing accuracy.
[sbull] Review determinations and hearing decisions are written
accurately, clearly, and in a customer friendly tone.
[sbull] Telephone reviews are appropriately documented and
adjudicated timely.
[sbull] Requests for ALJ hearings are forwarded timely.
[sbull] Accuracy and timeliness of processing appeals under
BIPA.
Note: Section 521 of BIPA and section 940 of DIMA amend section
1869 of the Act by requiring major revisions to the Medicare appeals
process. Upon implementation of section 521 of BIPA, the first level
in a beneficiary's appeal will be a ``redetermination'' which will
replace the current review for Part B appeals. DMEPOS regional
carriers will be required to process all requests for
redeterminations within 60 days of receipt of the request. Upon
implementation of section 521 of BIPA and section 940 of DIMA, we
intend to begin evaluating whether DMEPOS regional carriers are
meeting the timeliness and accuracy requirements for processing
redeterminations. Because the ability for beneficiaries to request
this new first level of appeal will not be initiated until section
521 of BIPA is implemented, there will be a period of time in which
DMEPOS regional carriers will not only be processing
redeterminations, but will continue to process the review and
hearing workloads that existed prior to the implementation of BIPA.
Upon the implementation of section 521 of BIPA and section 940 of
DIMA, this 60-day requirement and the processing accuracy will be
additional functions that may be evaluated.
B. Customer Service Criterion
The Customer Service Criterion contains the following mandated
standard:
Standard. Replies to beneficiary correspondence, addresses
concerns raised, writes with an appropriate customer-friendly tone
and clarity at the appropriate reading level.
Contractors must meet our performance expectations that
beneficiaries and suppliers are served by prompt and accurate
administration of the program in accordance with all applicable
laws, regulations, the DMEPOS regional carrier SOW, and our general
instructions.
Additional functions that may be evaluated under this criterion
include, but are not limited to, the following:
[sbull] Providing timely and accurate replies to beneficiary and
supplier telephone inquiries.
[sbull] Monitoring calls for quality.
[sbull] Training of Customer Service Representatives.
Ensuring the validity of the call center performance data that
are being reported in the Customer Service Assessment and Management
System.
[sbull] Providing timely and accurate replies to beneficiaries,
providers, and suppliers.
[sbull] Maintaining walk-in inquiry service.
[sbull] Conducting beneficiary and supplier education, training,
and outreach activities.
[sbull] Effectively maintaining an Internet Website dedicated to
furnishing suppliers timely, accurate, and useful Medicare program
information.
[sbull] Ensuring that communications are made to interested
supplier organizations for the purpose of developing and maintaining
collaborative supplier education and training activities and
programs.
C. Payment Safeguards Criterion
DMEPOS regional carriers may be evaluated on any MIP activities
if performed under their contracts. The DMEPOS regional carriers
must undertake actions to promote an effective program
administration for DMEPOS regional carrier claims. These functions
and activities include, but are not limited to the following:
[sbull] Benefit Integrity
--Identifying potential fraud cases that exist within the DMEPOS
regional carrier's service area and taking appropriate actions to
resolve these cases.
--Investigating allegations of potential fraud made by
beneficiaries, suppliers, CMS, OIG, and other sources.
--Putting in place effective detection and deterrence programs
for potential fraud.
[sbull] Medical Review
--Reducing the error rate by identifying patterns of
inappropriate billing.
--Educating suppliers concerning Medicare coverage and coding
requirements.
[sbull] Medicare Secondary Payer
--Accurately reporting MSP savings.
--Accurately following MSP claim development/edit procedures.
--Supporting the Coordination of Benefits Contractor's efforts
to identify responsible payers primary to Medicare.
--Identifying, recovering, and referring mistaken/conditional
Medicare payments in accordance with the appropriate program
instructions in the specified order of priority.
[sbull] Overpayments
--Determining that the DMEPOS regional carrier completely,
accurately, timely, and aggressively pursued all outstanding
overpayments in adherence with the Medicare Carriers Manual and CMS
Program Memoranda resulting from the Debt Collection Improvement Act
(DCIA).
--Verifying that all overpayments were timely and accurately
recorded.
D. Fiscal Responsibility Criterion
We may review the DMEPOS regional carrier's efforts to establish
and maintain
[[Page 74620]]
appropriate financial and budgetary internal controls over benefit
payments and administrative costs. Proper internal controls must be
in place to ensure that contractors comply with their contracts.
Additional matters that may be reviewed under this criterion
include, but are not limited to the following:
[sbull] Compliance with financial reporting requirements.
[sbull] Adherence to approved program management and MIP
budgets.
[sbull] Control of administrative cost and benefit payments.
E. Administrative Activities
We may measure a DMEPOS regional carrier's administrative
ability to manage the Medicare program. We may evaluate the
efficiency and effectiveness of its operations, its system of
internal controls, and its compliance with our directives and
initiatives. Our evaluation of a DMEPOS regional carrier under this
criterion may include, but is not limited to review of the
following:
[sbull] Systems Security.
[sbull] Disaster recovery plan/systems contingency plan.
[sbull] Internal controls establishment and use, including the
degree to which the contractor cooperates with the Secretary in
complying with the FMFIA.
VIII. Action Based on Performance Evaluations
We evaluate a contractor's performance against applicable
program requirements for each criterion. Each contractor must
certify that all information submitted to us relating to the
contract management process, including, without limitation, all
files, records, documents and data, whether in written, electronic,
or other form, is accurate and complete to the best of the
contractor's knowledge and belief. A contractor is required to
certify that its files, records, documents, and data have not been
manipulated or falsified in an effort to receive a more favorable
performance evaluation. A contractor must further certify that, to
the best of its knowledge and belief, the contractor has submitted,
without withholding any relevant information, all information
required to be submitted for the contract management process under
the authority of applicable law(s), regulation(s), contract(s), or
our manual provision(s). Any contractor that makes a false,
fictitious, or fraudulent certification may be subject to criminal
and/or civil prosecution, as well as appropriate administrative
action. This administrative action may include debarment or
suspension of the contractor, as well as the termination or
nonrenewal of a contract.
If a contractor meets the level of performance required by
operational instructions, it meets the requirements of that
criterion. When we determine a contractor is not meeting performance
requirements, we will use the terms ``major nonconformance'' or
``minor nonconformance'' to classify our findings. A major
nonconformance is a nonconformance that is likely to result in
failure of the supplies or services, or to materially reduce the
usability of the supplies or services for their intended purpose. A
minor nonconformance is a nonconformance that is not likely to
materially reduce the usability of the supplies or services for
their intended purpose, or is a departure from established standards
having little bearing on the effective use or operation of the
supplies or services. The contractor will be required to develop and
implement a PIP for findings determined to be either a major or
minor nonconformance. The contractor will be monitored to ensure
effective and efficient compliance with the PIP, and to ensure
improved performance when requirements are not met.
The results of performance evaluations and assessments under all
criteria applying to intermediaries, carriers, RHHIs, and DMEPOS
regional carriers will be used for contract management activities
and will be published in the contractor's annual Report of
Contractor Performance (RCP). We may initiate administrative actions
as a result of the evaluation of contractor performance based on
these performance criteria. Under sections 1816 and 1842 of the Act,
we consider the results of the evaluation in our determinations
when--
[sbull] Entering into, renewing, or terminating agreements or
contracts with contractors, and
[sbull] Deciding other contract actions for intermediaries and
carriers (such as deletion of an automatic renewal clause). These
decisions are made on a case-by-case basis and depend primarily on
the nature and degree of performance. More specifically, these
decisions depend on the following:
--Relative overall performance compared to other contractors.
--Number of criteria in which nonconformance occurs.
--Extent of each nonconformance.
--Relative significance of the requirement for which
nonconformance occurs within the overall evaluation program.
--Efforts to improve program quality, service, and efficiency.
--Deciding the assignment or reassignment of providers and
designation of regional or national intermediaries for classes of
providers.
We make individual contract action decisions after considering
these factors in terms of their relative significance and impact on
the effective and efficient administration of the Medicare program.
In addition, if the cost incurred by the intermediary, RHHI,
carrier, or DMEPOS regional carrier to meet its contractual
requirements exceeds the amount that we find to be reasonable and
adequate to meet the cost that must be incurred by an efficiently
and economically operated intermediary or carrier, these high costs
may also be grounds for adverse action.
IX. Regulatory Impact Statement
We have examined the impacts of this notice as required by
Executive Order 12866 (September 1993, Regulatory Planning and
Review), the Regulatory Flexibility Act (RFA) (September 16, 1980,
Pub. L. 96-354), section 1102(b) of the Social Security Act, the
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and Executive
Order 13132.
Executive Order 12866 directs agencies to assess all costs and
benefits of available regulatory alternatives and, if regulation is
necessary, to select regulatory approaches that maximize net
benefits (including potential economic, environmental, public health
and safety effects, distributive impacts, and equity). A regulatory
impact analysis (RIA) must be prepared for major rules with
economically significant effects ($100 million in any one year).
Since this notice only describes criteria and standards for
evaluating FIs (including RHHIs), carriers, and DMEPOS regional
carriers and has no significant economic impact on the program, its
beneficiaries, providers or suppliers, this is not a major notice.
The RFA requires agencies to analyze options for regulatory
relief of small businesses, but intermediaries, RHHIs, carriers and
DMEPOS regional carriers are not small businesses.
In addition, section 1102(b) of the Act requires us to prepare a
regulatory impact analysis if a rule may have a significant impact
on the operations of a substantial number of small rural hospitals.
This notice does not affect small rural hospitals.
Section 202 of the Unfunded Mandates Reform Act of 1995 also
requires that agencies assess anticipated costs and benefits before
issuing any rule that may result in expenditure in any 1 year by
State, local, or tribal governments, in the aggregate, or by the
private sector, of $110 million. In accordance with section 202, we
have determined that the notice does not impose any unfunded
mandates on States, local or tribal governments, or on the private
sector.
Executive Order 13132 establishes certain requirements that an
agency must meet when it promulgates a notice that imposes
substantial direct requirement costs on State and local governments,
preempts State law, or otherwise has Federalism implications. We
have determined that the notice does not significantly affect the
rights, roles, and responsibilities of States.
We have not prepared a Regulatory Impact Analysis for this
notice, in accordance with Executive Order 12866, because it will
not have a significant economic impact, nor does it impose any
unfunded mandates on State, local, or tribal governments or the
private sector. Furthermore, we certify that the notice will not
have a significant impact on a substantial number of small entities
or small rural hospitals.
In accordance with the provisions of Executive Order 12866, this
notice was reviewed by the Office of Management and Budget.
X. Collection of Information Requirements
This document does not impose information collection and
recordkeeping requirements. Consequently it need not be reviewed by
the Office of Management and Budget under the authority of the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).
Authority: Sections 1816(f), 1834(a)(12), and 1842(b) of the
Social Security Act (42 U.S.C. 1395h(f), 1395m(a)(12), and
1395u(b)).
(Catalog of Federal Domestic Assistance Program No. 93.773,
Medicare--Hospital
[[Page 74621]]
Insurance, and Program No. 93.774, Medicare--Supplementary Medical
Insurance Program)
Dated: June 5, 2003.
Thomas A. Scully,
Administrator, Centers for Medicare & Medicaid Services.
Editorial Note. This document was received at the Office of the
Federal Register on December 17, 2003.
[FR Doc. 03-31468 Filed 12-23-03; 8:45 am]
BILLING CODE 4120-01-P